How much investment will China need to achieve carbon neutrality？

Looking at different time periods, Wang Hanfeng believes that from 2021 to 2030, the annualized demand for green investment in China to reach the "carbon peak" is about 2.2 trillion yuan per year. From 2031 to 2060, in order to achieve "carbon neutrality", the annual demand for green investment in China is about 3.9 trillion yuan per year.

From the perspective of different industries, Wang Hanfeng said that in order to achieve the goal of "carbon neutrality", the power industry has the largest demand for green investment, with a total demand of 67.4 trillion yuan; followed by the transportation and construction industries, with a total demand of 37.4 trillion yuan and 37.4 trillion yuan respectively. 22.3 trillion yuan.

"The funds needed for green investment are green finance." Wang Hanfeng said that China is currently building the entire green financial system in an all-round way, but there are still some gaps in the development of leading regions in green finance, such as Europe. From an international perspective, China's emphasis on green finance is rising rapidly, and even in the more detailed ESG system, China is also rapidly embracing it.

Wang Hanfeng believes that the process of achieving the goal of "carbon neutrality" will have a comprehensive and in-depth impact on the production, living and consumption of the entire human society, which will be embodied in six aspects:

The first is technology assistance. The process of achieving "carbon neutrality" is itself a technological revolution. Technological progress plays a key role in the full use of renewable and clean energy, and is also an important means to achieve energy conservation.

The second is that energy becomes "lighter". On the one hand, it will promote energy conservation and emission reduction, and reduce the use of traditional fossil energy; on the other hand, it will increase the use of clean and renewable energy, such as solar energy, wind energy, hydropower, etc. light".

The third is financial "heaviness". The factors that need to be considered in financial analysis are more "sustainable development" dimensions, and the analysis and supervision processes such as financial investment, pricing, and risk measurement have become "heavy". At the same time, some traditional energy and carbon emission-heavy industries face the risk of being "obsolete", which makes the value of loans, equity and other forms of financial assets in some traditional industries face greater uncertainty, thereby increasing "bad debts", "" default” and other financial risks.

The fourth is commodity "regeneration". Carbon emission reduction in the production process of basic materials such as steel, non-ferrous metals, and cement is the key. The "reuse" of existing resources and the realization of "circular economy" may be one of the important means. Transitioning to a circular economy and significantly increasing the utilisation and recycling rates of key materials is particularly critical in areas such as steel, cement, fertilizers and plastics.

The fifth is regional "remodeling". Factors such as the degree of dependence of different regions on traditional energy, the level of manufacturing technology and status in the global industrial chain, and the ability of technological innovation may affect the efficiency of different economies in responding to the "carbon neutral" revolution.

The sixth is consumption "low carbon". A green and low-carbon consumption mode is the key means to reduce the carbon emission of the economic terminal. Today, green consumption has penetrated into all aspects of residents' clothing, food, housing and transportation.

So in investment, will following the principles of carbon neutrality and sustainable development reduce the expected return on investment? Wang Hanfeng believes that although the realization of carbon neutrality is a process of "internalizing" the externalities of traditional energy utilization, which may lead to rising costs in the short term, high dependence on technological breakthroughs in the medium term, and upgrading of rules, etc., considering the realization of carbon neutrality It balances short-term costs and long-term potential returns, and there is a high degree of uncertainty in the medium and long-term returns brought about by technological revolution. Following the principles of carbon neutrality and sustainable development does not necessarily reduce the potential return on investment.

He also believes that the global trend towards carbon neutrality makes markets with different resource endowments and different links in the industrial chain face different opportunities and risks. Active response and research are the keys to obtaining returns from investment and avoiding risks.